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Economic Boom, Strong Currency, Big Changes in Canada PDF Print E-mail
Written by Steve Dittmer   
Thursday, 17 January 2008
AFF Sentinel Vol.5#02
Something I noticed in a Regina, Saskatchewan airport gift shop brought home to me how powerful and personal the prolonged beef ban has been for the Canadian people, not just cattlemen. There was a stack of t-shirts, depicting -- cartoon style -- Holstein cows on both sides of the U.S./Canadian border. But the cow on the Canadian side was one angry "Mad Cow," because she was not allowed to cross the border into the U.S. That the issue was a general merchandise subject at the airport rather than at a cattle show, surprised me.

But it was also surprising to find out Canadian cattlemen are struggling, even though the under-30 month ban has been lifted and now over-30-month cattle - properly identified - are eligible. This is a lesson to those who believe one industry in one country can be fine-tuned or controlled or isolated from the rest of Planet Earth. The very strong Canadian dollar has changed the landscape for all Canadian citizens. Canadian exports are more expensive because of the currency strengthening to levels not seen since the 19th century, dampening exports and costing jobs. The strong world prices for Canadian exports like oil, natural gas and metals have bolstered the currency (The Economist, "A Nation of Angry Shoppers," 11/10/07) but raised costs for domestic users, too, like cattlemen.

Canadian consumers, unwilling to pay the higher Canadian prices preprinted on some goods like books and other goods not re-priced by Canadian retailers to reflect the higher "loonie," have streamed southward or ordered from the internet. The Economist also pointed out that the currency swap has highlighted differences overlooked before. Canada's central bank governor David Dodge reminded Canadians that prices will never be the same on both sides of the U.S./Canadian border because there is less competition in Canada, where segments of the economy are government-regulated monopolies. He pointed out that in Europe, the introduction of a single currency - the Euro -- exposed differences in taxation and regulation among countries.

The presidents of several cattlemen's associations and this reporter were invited by the Canadians to the Western Canada Agribition in Regina, Saskatchewan to visit with Canadian cattlemen, exchange questions and views and talk to the media.

I don't know whether it was taxation or what, but the $66,000 sticker on a displayed crew-cab pick-up at the show induced shudders from the American cattlemen. With Canadian fed cattle prices lagging 20 bucks/cwt. behind U.S. prices, it's worse for them. While the Japanese market has been open for Canada longer than the U.S., export volume has not recovered enough to move the supply. That has more of an impact on the Canadian beef industry than it does for the U.S.

Canadians take for granted the importance of free trade because they traditionally have exported more than 50 percent of production. Major natural resources, like oil, natural gas, metals and timber products, have long been exported from Canada to countries around the world. They are the top supplier of oil and natural gas imported into the U.S. In Canada, exporting is a given mindset, an irreplaceable cog in marketing their production.

With its large population, the U.S. has never been as dependent on the beef export market. It was ten percent of production before the BSE crisis. It's been a struggle to get back to five percent in volume, even though the value of beef exported exceeded 2003 levels in the first three quarters this year. While part of the strong demand for beef in recent years has been better quality, new convenience products, new cuts and a more receptive attitude on nutrition and health, U.S. population growth gets overlooked. Not very long ago, the U.S. population was 250 million. Now it's 300 million. But that may well level off again, especially if illegal immigration is ever controlled.

The oil boom has had a huge impact on the labor market for every other industry in Canada. Signs in oil country restaurants ask patrons "not to abuse the wait staff," as the chronic dearth of enough help makes for long waits and surly customers. Truck drivers can make $200K annually and get solid gold treatment. You can imagine the difficulties in keeping feedyards and packing plants staffed under such conditions.

It's always enlightening to study cattlemen's advantages and problems in other national economies. The key is that all national economies today exist within a tight-knit global economy.

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Last Updated ( Monday, 18 February 2008 )
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